ReadyForZero’s Free Service Eases Credit Card Troubles

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when, that same week, my girlfriend came to me. She had finished her PhD and gotten a great job, but her debt was holding her back and she was starting to struggle. That’s how the seed was planted.”

After exiting Y Combinator with a prototype advisory system last August, Ebrahimi and Thayer collected a $260,000 seed round from high-profile individual investors like YouTube co-founder Steve Chen and 500 Startups founder Dave McClure. They’ve been working ever since to refine the service’s interface and build backend connections to all of the financial institutions where they’ll need to grab users’ data. Now it’s ready for the public.

Interestingly, though, ReadyForZero wasn’t the service Ebrahimi and Thayer set out to build when they got to Y Combinator. Ebrahimi says the idea the pair originally pitched to the incubator program had to do with social news aggregation—think Facebook meets Google Reader. They even had a working prototype. Testers liked it, Ebrahimi says, but they didn’t return to it over and over. In other words, they didn’t seem to need it. “We wanted to solve a real problem,” says Ebrahimi. “Once we started looking at it from that angle, it was just a nice toy. It was a lot of fun, but we weren’t really solving anyone’s problem.”

Fortunately, that’s exactly when the two tales of credit-card woe showed up in Ebrahimi’s inbox, giving the team a clearer problem to work on. “Because we have people in our age and demographic with this problem, it was very clear what their hurdles were,” says Ebrahimi. “We were building a product for ourselves in some ways.”

So far, ReadyForZero is keeping its service fairly simple. There’s a calculator that will predict how long it will take to pay off your credit cards, based on whatever monthly payment you say you can afford. There’s a handy table showing how much you owe on each card, and when the next payment is due. The site also offers advice about which card to pay off first, based on the current interest rate (a critical piece of information that’s often hard to track, Ebrahimi says, since many cards have variable rates that change depending on the consumer’s recent behavior).

“Have just a little visibility empowers people a lot,” Ebrahimi says. “The new Consumer Financial Protection Bureau flew us to Washington recently to demo the product there. There was a lot of interest in just creating tools that create visibility, and once it’s there you are surprised how people’s behaviors change.”

If it’s not charging to create all this visibility, how does ReadyForZero make money? In just one way, so far. If the company’s algorithms think that a user will qualify, they may recommend … Next Page »